…or a Happy buyer wanting a cheap chunk?
Printable View
i wouldnt , maybe why the person ditched out yesterday
February sees record drop for property prices
https://www.newshub.co.nz/home/money...-trade-me.html
LOL - isn't it amazing how different people can interpret the same set of data? :
https://www.oneroof.co.nz/news/tony-...e-prices-43229
Hi guys, thought a post is now well overdue after a significant absence.
I've been cycling the “Tour Aotearoa” so far more preoccupied with other aspects of life
i.e. where the next TipTop diary is. ( it was also insightful to get so many aspects on what life is going like for NZ`ers )
OCA haven't made an announcement of any value for 4 months now there is only industry and macro wide news .
Here's a summary of how i've been thinking during this time;
RYM needed a massive capital raise.
A. OCA did theirs a while back when they announced a higher build rate increase. They currently have by my calcs about 140 new apartments for sale . This is about 30% more than normal.
B. They also have Helier and Christchurch Windermere about to deliver. Brent said this will be about the top of their debt value as all these start selling down. Again by my calc`s , if they stopped building today , these selling down fully will pay off ALL of OCAs debt.
C. OCA has already raised extra money at a favorable time at superb rates, simultaneously expanding the debt facilities.
D. Directors being heavily stacked towards bankers and accountants
E. OCAs DMF and sale margins are higher than RYM.
F. and already having a DRP scheme in place.
-In my opinion , due to these factors OCA, will not have to do a further capital raise.
SUM`s profit report.
An excellent result exactly where it should have been . Strong evidence the industry is moving forward as the juggernaut is as it always has been.
The only disappointment in the whole report to me was that the Govt has done NOTHING since announcing pay parity with DHB nurses 3 months ago.
Interest rates and share price
What I do observe is that the RV Share prices are now almost disconnected to company performance and asset backing. Rather it now seems clear, to me at least , that the share price is now predominantly set inversely by NZ 10 year bond rates. Particularly OCA.
See attached graph below of NZ10 year bonds ( blue line) versus OCA share price.( black line)
On a positive note here , anecdotally after traveling through NZ , meeting large amounts of kiwis and seeing recent NZ bonds/ US10year treasury movements it's possible we have passed peak inflation. Meaning this could be at or near the bottom of the share price plummet.
Notice on the graph how the share price has not picked up recently despite bonds falling as it normally would. One of these 2 values will need to correct and last I looked the NZ and US economy is bigger than OCA share price.
Attachment 14516
Earnings FY23
I still fundamentally expect a FY23 underlying profit of around $62m. That's about 10% up on last FY.
This calculation has low “news sales” expectations and no contribution from the 2 large deliveries about to complete.
No matter what good result OCA puts in this FY23 , it seems unlikely that it will affect the SP much. At least we long term shareholders will enjoy an increased dividend as we wait. Wasn't that always the plan anyway?
Despite a relentlessly brutal 18 months share price wise my continued confidence in the industry and company continues. OCAs strategy of care + quality at the top end and my respect for its management team means I will not be selling. In the meantime I expect an escalating growing underlying profit as their execution starts to gain traction.
At some point a turn around in inflation/ and therefore market sentiment has to occur and we can see when it does happen it happens fast. It is my opinion that the former has already started.
Thanks Maverick for sharing your views.
I have also mentioned on here a number of times that OCA don't require a CR. But those who don't understand OCA world seem rather convinced that they require one. Anyway back to the OCA juggernaut.
I thought SUM's result was outstanding given the macro goings on for past 12 months and was somewhat encouraged. So hoping for positive vibes in May when OCA report, then I always held belief that OCA was 2023/24 beyond.
Glad you enjoyed your tour of our Beautiful country. GWD
Had another look at OCA’s financials again in the face of relentless pressure on the housing sector out there with prices in some suburbs down 40%. The consensus is that property prices out there are down on average between 20% to 25% so far, since they peaked in Nov 2021.
Observations:
The accounts of the RVs completely defy logic - they were still recording upward revaluations in 2022 in the face of falling property prices. The market obviously does not believe the RVs which is why their share prices are marked down so severely.
If we take OCA as an example, the company sat on $1.6 billion of investment property assets as at 30 Sept 2022, $964m of equity and $500m of debt.
If we allow for a fall in OCA’s valuation by 20% as an example, the numbers change to :
$1.28 billion in investment property assets and $644m of equity. Debt obviously remains the same at $500m.
A 25% fall in property values would have assets at $1.2 billion and equity at $564m.
Leverage - great on the way up, extremely painful on the way down.
So when does the property cycle turn and move back up? History suggests it will be 2026 before the market turns.